Corixa a booster for GSK’s vaccines unit

Source: CMR

2005/05/08

GlaxoSmithKline gave its growing vaccines franchise a shot in the arm late last month by agreeing to acquire its long-term immunotherapeutics partner, Corixa Corp. With the deal, GSK will now enjoy full ownership of the vaccines the companies have been developing together—a move some analysts are interpreting as a vote of confidence in the prospects for the late-stage HPV vaccine Cervarix.

Corixa’s novel adjuvant MPL (monophosphoryl lipid A) appears to be the cornerstone of the deal. Adjuvants are formulated compounds or additives that are combined with a vaccine to boost the body’s immune response to the antigens in the vaccine. MPL is a particularly potent adjuvant, triggering a string of events that lead to a strong TH1 type of cellular response, which then stimulates the production of antibodies.

For example, Fendrix, GSK’s hepatitis B vaccine containing Corixa’s MPL adjuvant, was able to seroconvert (or achieve a protective antibody level) 98 percent of patients after just two doses. By comparison, it takes three doses of Energix-B, currently the leading hepatitis B vaccine, to achieve that level of seroconversion.

GSK has incorporated MPL in most of the vaccines in its pipeline, which includes two products currently under regulatory review (meningitis vaccine and Priorix-Tetra), four products in Phase III (Cervarix, Simplirix, Rotarix and Streptorix) and 11 products in Phase I or II. Corixa’s MPL adjuvant is used in Cervarix and Simplirix, as well as the Phase II malaria vaccine Mosquirix.

With the relationship between GSK and Corixa already deep, analysts were not surprised at the combination.

“When biotech companies and big pharma get together there’s a continuum of relationships—there’s dating, which is in-licensing or out-licensing, engagement, when they copromote, and then there’s marriage, where they get together,” says Needham & Co. analyst Mark Monane. “There was already an engagement with Bexxar and dating with [MPL]. They already had two hits on the continuum.”

The deal is timed as Cervarix, a vaccine against human papillomavirus, inches closer to commercialization. With the acquisition, GSK captures Corixa’s manufacturing facility in Hamilton, Montana, allowing the company to bring in-house all aspects of the manufacturing for Cervarix, notes Monane.

Last July, Corixa and GSK entered into a manufacturing agreement that called for Corixa to supply GSK Biologics with its MPL adjuvant through 2012. Corixa had agreed to expand production capacity for MPL at the Hamilton site in anticipation of increased demand as GSK vaccines moved through the pipeline. The companies also planned to work together to develop a large-scale production process for the MPL adjuvant.

Taking on the complete manufacturing may add a layer of comfort to GSK, which has years of experience in the complex production of vaccines, adds Monane.

Further, the acquisition frees GSK of financial obligations associated with the manufacturing agreement. As part of last year’s deal, Corixa would not only be paid for its manufacturing work, but stood to receive royalties on any GSK vaccine containing the MPL adjuvant.

“Despite the premium offered to Friday’s close, the acquisition appears sensible on the basis that development payments and royalties cease,” says UBS analyst David Beadle. “For the Cervarix bulls, the deal would appear to confirm GSK’s faith in the project, and the acquisition appears an inexpensive option if Cervarix is expensive.”

Cervarix is one of the most highly anticipated vaccines to come out of the companies’ collaboration. Trial data show the vaccine continues to offer complete protection against HPV at 27 months—a longer range than a competing HPV vaccine in development by Merck & Co.

The vaccine is also aimed at a highly underserved market: about 5.5 million people in the US are infected with HPV, which can lead to cervical cancer, yet there are currently few treatment options and no preventative vaccines on the market.

GSK plans to file for approval in the EU in 2006 and in the US in 2008, and UBS expects Cervarix to bring in $150 million in 2007, ramping up to $574 million in 2009.

Health care consultancy Datamonitor says combined sales of Cervarix and the Merck vaccine could peak at $1 billion to $3 billion.

GSK’s vaccines unit received an added boost last week with the FDA approval of its whooping cough vaccine Boostrix. With several late-stage vaccines in the pipeline, UBS forecasts the company’s overall vaccines franchise will grow to $2.15 billion in 2009 from $1.19 billion in 2004.